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Tips & tricks to help you get the most out of your online advertising.

Top 5 Ways You're Leaking Money in AdWords

The typical small business wastes 25% or more of their total paid search spend. It’s obviously a big problem, but tackling wasted spend in Google AdWords can be challenging for account managers. Instead of focusing on the latest PPC fads or shiny new tools, I encourage advertisers to head back to the basics and focus on the core components of their campaigns. Oftentimes, just by tweaking your settings or adjusting your structure, you can patch up your biggest account leakages.

Here are the top five culprits that I recommend taking a second look at when assessing your wasted AdWords spend.

Overuse of Broad Match Type

Setting all of your keywords to broad match can have a devastating impact on your PPC account. Remember, by setting a keyword to a broad match type, you are opening the door for Google to show your ad anytime a query is related to or contains a part of your keyword. While broad keywords often attract a high volume of searchers, few tend to be truly qualified leads. Broad match is Google’s default match type, so new advertisers often fall into this trap. If your entire keyword list is set to broad match, take some time to analyze and adjust your match types. Believe me, it will be well worth the effort!

That said, I don’t want to dissuade you from using broad match occasionally. This match type is beneficial when you are looking to expand your audience and conduct keyword research. Use it wisely:

Lack of Negative Keywords

Another rookie mistake that can wreak havoc on your performance is a lack of negative keywords in your account. With paid search, your goal is to drive relevant, qualified traffic to your website. If you detect that a searcher is looking for something that you do not offer, eliminate the possibility of showing your ad to them by setting a negative keyword.

You can sometimes predict the most important negatives for your business. For example, if you run a car dealership that only sells brand new models, it is a no-brainer to set “used” as a negative keyword. However, there are some instances in which the most critical negatives are challenging to predict. To find these terms, I recommend actively mining your search query report. To see how this saved one of my clients hundreds of dollars, check out this post: Help, My Search Query Report Has Bieber Fever! Plus 5 Tips for Setting Negatives.

Stacked Bid Modifiers

When AdWords introduced Enhanced Campaigns, advertisers were thrilled at the prospect of setting bid modifiers. Bid modifiers allow account managers to adjust their original bids based on the time of day that a search occurs, the searcher’s location and the device that they are using. In theory, this is a godsend for advertisers because it allows them to easily prioritize bids for their most qualified searchers.

In reality, this feature can result in vast overbidding. Here’s the catch—if a search fits the criteria for multiple bid modifiers, all adjustments are “stacked” on the base bid. For example, imagine that a keyword’s base bid is $1 and you’ve set your device modifier to increase bids by 100% on smartphone searches, your geographic modifier to increase bids by 50% for searchers located in Florida and your time of day modifier to raise bids by 100% from 9-11PM in the evenings. If someone in Florida searches this keyword on their phone at 9PM at night, the bid will automatically be bumped to $6.

Here’s the breakdown:

Base bid = $1

$1 x device modifier of 100% = $2

$2 x geographic modifier of 50% = $3

$3 x time of day modifier of 100% = $6

Final bid = $6!

As you can see, when bid adjustments are combined, your max CPC can multiply at a dangerous rate. Keep this in mind as you set your bid adjustments and monitor them carefully. If you want to play it safe, try experimenting with small, incremental adjustments or stick with one or two at a time (device is usually the most critical).

Poor Location Targeting

At first glance, AdWords’ location targeting seems fool-proof, but it can actually be the source of many wasted advertising dollars. Google manipulates your geo-targeting settings to ensure that your ads are getting plenty of impressions. As anticipated, your ads will be shown to searchers located within your target area. However, they will also be shown to people who are “searching for or viewing pages about my targeted location.” If you’ve ever noticed odd locations appearing in your geo reports, this is likely the culprit. While this setting may be beneficial for some advertisers, it could lead to many costly, unqualified clicks for others. Learn how to regain control of your location targeting.

Using AdWords Express

If there was one piece of PPC wisdom I could impart to all small businesses, it would be to steer clear of AdWords Express. If you’re not familiar with this program, it is free account management service by none other than “the Goog” itself. To participate, all you have to do is write three lines about your business and set your budget. From there, Google will automatically build and maintain your account.

Free account management sounds like a small advertiser’s dream, but don’t get swept away too quickly. AdWords express campaigns tend to be poorly constructed and are subject to little maintenance. The major flaw in this program is that Google only provides “read only” access to participants. In reviewing the setup, the advertiser may find keywords that are not pertinent to the business or inappropriate negatives, but you do not have the option to edit the campaign.

Pinpoint Your Own Account Leakages

If you’re not sure where you’re wasting money in AdWords – or how much – I recommend getting a free AdWords Performance Report. We’re running a contest right now where you can enter to win a $25K PPC budget for 2014 plus a year’s worth of marketing tools from WordStream and Constant Contact. Just use the AdWords Performance Grader and tell us what you learned. It’s free and whether you win or not, you’ll have some great, actionable insight into your account performance right now. Learn more here.

Erin Sagin

Erin Sagin worked at WordStream for five years with roles in Customer Success and Marketing. She lives in California.